The new retirement savings depot could pose a multi-billion euro risk to the federal budget. According to the economic magazine “Capital” the primary concerns are the high state subsidies and anticipated drops in tax revenues. Coalition sources within Berlin have likened the initiative to a “ticking time bomb” for the federal treasury. One representative on the Bundestag’s Finance Committee admitted that the cost projections included in the draft law were “optimistically calculated”.
The goal of the retirement savings depot is to provide employees and self-employed workers with state-subsidized access to favorable stock funds and ETFs starting January 1, 2027. Given the scope of the program, an estimated 42 million people in Germany may be eligible for both a subsidized account and the corresponding state grants. The new offering is expected to replace the highly criticized Riester pension, a development that most experts view as a significant advancement.
However, while banks, brokers, and fund providers anticipate a massive rush to adopt the new depot, the Federal Ministry of Finance has calculated the uptake of the new scheme with extreme caution. The Ministry’s finance ledger for the newly passed law estimates that the annual shortfall in tax revenues will climb to approximately 880 million euros by 2030. Regarding the subsidies, the Ministry only assumes that the current decline in Riester supplementary funding, observed over previous years, will be halted by the new offer.
In reality, the number of active Riester savers has been declining for years, falling recently to fewer than ten million. Consequently, the average cost for state subsidies has decreased by 175 million euros annually. The official justification for the reform states the assumption that “this decline will be stopped by the reform, as the loss of legacy contracts will be replaced by contracts in the new product world”. When pressed for detail, a Ministry spokesperson quoted “Capital” by stating that any accounting of legal drafts “contains no forecasts regarding future changes in numbers of subscribers”.
Despite this, the more successful the savings depot proves to be, the more likely these initial calculations will appear significantly understated. Coalition representatives have acknowledged that if the system is successful, the initial cost estimates could quickly become grossly underestimated. They calculate that the annual costs could rise into the double-digit billions-far exceeding the figures officially budgeted by the Ministry of Finance-if between ten and twenty million people begin contributing to a private retirement depot.
This expectation is echoed by the financial sector. Providers interviewed by “Capital” stated that they anticipate a retention rate of at least double the numbers of state-subsidized private retirement contracts.